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The sports foundation at the heart of the Millwall FC compulsory purchase battle has been making false claims of having a £2m funding agreement from Sport England during the ongoing CPO process, the Guardian can reveal.

The claims have been made by the Surrey Canal Sports Foundation, a charitable company set up and backed by loans from Renewal, an offshore-registered developer with historical connections to senior Lewisham council officers that stands to benefit from the seizure of Millwall’s land.

The revelations will be seized on by opponents of the scheme and could throw into doubt the future of the entire £1bn project. The compulsory purchase is the subject of local protest and wider public concern, with suggestions from Millwall’s chief executive that the fallout from the seizure of land around the Den could even threaten the club’s future existence in London.

Sport England is the UK’s most prestigious grassroots sport funding vehicle. The £2m Sport England “pledge” has been mentioned repeatedly as a material factor by Lewisham council and the Renewal‑backed foundation, whose functions are key to the viability of the scheme. Such a grant would in practice act as a major rubber-stamp of viability and authenticity, a threshold that once passed “unlocks” access to other potential sources of charitable and public money.

The £2m claim was present on 25 June 2014 in a report to Lewisham’s mayor and cabinet recommending the grant of half a million pounds of public money to the foundation. It was repeated as “a pledge in principle” in CPO documents produced by the council last year. The claim of £2m Sport England funding has been splashed across the Surrey Canal Sports Foundation website, which was taken down within the past 24 hours.

In fact no such funding agreement exists. No application for a funding agreement is in process. Sport England has confirmed that it has had no official correspondence with the foundation since September 2014.

Sport England told the Guardian: “In 2010 we received a funding application from the Surrey Canal Sports Foundation, but this was subsequently withdrawn in 2013. We therefore have no funding agreement, of any kind, in place with them.”

In spite of this the £2m claim was listed in a table of “capital pledges” in the written section of the foundation’s 2014-15 accounts, documents that are subject to strict duties of accuracy and accountability. These accounts, which are an important source of information for potential donors and partners, were signed off by the former Tory minster Steven Norris.

Norris told the Guardian that Surrey Canal Sports Foundation originally approached Sport England in 2011 but that no application had been live since October 2013.

The Surrey Canal Sport Foundation was created to raise £40m in order to create a “sports village” as part of the development around the Den. It remains key to the argument in favour of public interest for the CPO-based scheme. The foundation’s directors include Sir Steve Bullock, the mayor of Lewisham; Norris; and Jordana Malik, a director of Renewal. Baroness Tanni Grey-Thompson was a trustee but is understood to have recently resigned from her position at the charity.

It is this foundation, whose accounts are issued jointly by all directors, that has claimed to have the £2m of Sport England funding. In January 2014, five months before half a million pounds of Lewisham council public money was granted to the foundation, Norris wrote in a Surrey Canal Sport Foundation “pitch” brochure called New Energy: “The Foundation already has £12m in commitments from Sport England and the Developer Renewal … I would ask the London Borough of Lewisham to publicly and financially support this project.”

The issue of how the mistaken claim of a funding agreement has arisen and then been repeatedly used for promotional effect will be a matter of concern for all connected with the development and potentially for other authorities. It would appear that correspondence between Sport England and the foundation in 2013 has been misinterpreted, by whatever means, to amount to an offer of tangible funding, and then repeated without correction to the present day.

The Guardian understands the foundation was placed on Sport England’s “strategic facilities list” in 2013, alongside a huge number of other projects, an acknowledgment of interest in and encouragement for its long‑term plans, with standard assurances that this was not a guarantee of funding.

Sport England has hundreds of projects of interest in the field at any time. It donates funds only at the end of a rigorous formal application process, with conditions to be met, contracts signed and all final hurdles satisfied.

Bullock, the Lewisham mayor, could now have some urgent questions to answer over his personal responsibility for information published on behalf of a charitable company of which he is a director. Bullock told the Guardian: “On the basis of the information provided at meetings of the SCSF Board I am satisfied that funding has been promised by Sport England.”

Where this leaves the sports complex at the heart of the CPO proceedings remains to be seen. Throughout discussion of Millwall’s exclusion from the New Bermondsey development the sports hub has been held up as an example of tangible public benefit. Questions will be asked now about the basic functions governance of the foundation.

According to documents seen by the Guardian, even as the foundation was being awarded half a million pounds by Lewisham council in July 2014 its website still listed its phone number as 01234657890, which connected to an automated message advertising that number for sale. On the same website the Surrey Canal Sport Foundation’s official address was recorded as 29 Acacia Road; an apparently unconnected location in north London that appears, in a bizarre detail, to be a bodged version of the home address of the cartoon superhero Bananaman.

The foundation does have fine aims for its future expansion. Currently it hosts the London Thunder basketball team and has 20 ping-pong tables available for public use. It is housed in a large converted hall rented at £156,234 a year from Renewal, running up what is a circa-£1m debt to the offshore-registered developers. Recent accounts reveal the foundation has had zero income for the past three years.

“Our initial application was placed on to Sport England’s Iconic Facilities Fund. In October 2013 we received a formal letter from Sport England which referenced their ongoing support for the project and that the application was now being moved on to the Strategic Facilities Fund.

“Whilst the SCSF has made significant progress over the past four years we have not progressed a more formal application since October 2013 due to the inordinate length of the compulsory purchase order process and ongoing land assembly led by Renewal.

“We are still awaiting the outcome of the CPO process but following this do intend to re-engage Sport England and will be making a formal application for funding in the coming weeks.”

As the Millwall CPO wrangle takes its latest twist there will be serious questions over the future of the project in its current form. Concerns have already been raised about the propriety of a scheme that would see public land sold off to a private developer with historical personnel links to Lewisham council and no history of attempting a development on this scale, in the process taking land from the borough’s outstanding community sporting asset.

For the past four years the Surrey Canal Sports Foundation and its planned sporting village have been an integral plank of this scheme. It now appears that false claims of a major funding pledge have accompanied the foundation on that journey.

The compulsory purchase order is due to be re-heard on 11 February. Before then it seems likely both the mayor, the trustees of the Renewal-backed sports foundation and other interested parties will be anxious to uncover exactly how such confusion could have occurred.